How will a No-deal Brexit Affect EU Coinbase Users?

With the Queen proroguing parliament and giving Boris Johnson, the UK’s Prime Minister, the green light to suspend parliament, Britain is drawing closer to exiting the European Union without a deal.

Proroguing parliament could spell a no-deal Brexit

Although it’s normal for the UK parliament to be suspended for a few days, this year’s suspension has been controversial both in timing and days. For instance, in 2014 and 2016, parliament was suspended for 13 and four working days respectively. This year, parliament will be suspended for twenty-three working days at a time when the debate of whether to exit the EU with or without a deal is still on the table.

If Johnson suspends parliament, members of parliament (MPs) will have little time to beat the October 31 deadline that is written into law. Although there is time left to stop this, either through a general election or a no-confidence vote, no deal has become an even greater reality than before.

The effects of a no-deal Brexit (Britain’s exit) will have adverse effects since the government will have to redraw some, if not all, of its agreements. Additionally, companies registered in the UK, which relied on the marriage between the UK and the EU, will also have to rethink their strategies. For instance, without a deal, companies operating in the EU but registered in the UK will need to seek licenses from countries within the EU. One such company in this predicament is Coinbase.

Coinbase preparing for a no-deal Brexit

UK based Coinbase, one of the biggest cryptocurrency exchanges, has signaled the possibility of transferring its European accounts to an EU licensed company if the UK leaves without an agreement. In an email sent to its users in Europe, Coinbase noted that a no-deal Brexit would prohibit it from providing electronic money services in the region.

CryptoVanessa, a Twitter user and presumably a Coinbase user in Europe, shared a section of the email on the social media platform.

According to the email:

“If the United Kingdom leaves the European Union on 31 October without any withdrawal agreement in place, it is expected that CB Payments, Ltd. will no longer be able to provide you with E-Money Services, such as your Euro wallet. In light of this, we plan to transfer your current relationship with CB Payments, Ltd. to another licensed Coinbase entity within the EU.”

Notably, CB Payments, which handles Coinbase UK’s virtual currency transactions from within the European Economic Area (EEA), is regulated by the UK’s financial watchdog, the Financial Conduct Authority (FCA). An important point to note is that currently, companies registered in the UK are recognized across the EU. However, if there’s a no-deal Brexit, companies such as Coinbase will have to operate under two subsidiaries since an FCA license won’t be valid outside Britain.